Annual Appraisals Have No Place in Agile Organisations

The annual appraisal is the cornerstone of many organisations. It is the chance managers have to review the achievements of their team members for the previous year, form the basis for setting objectives for the coming year and, often, a guide on whether your team members receive pay increases.

Yet many organisations also claim to be Agile. And herein lies the paradox. By definition, the annual appraisal, and in particular the objective setting, is a once a year thing. Fire and forget in many cases, right up until a week before the next one is due and then a mad scramble to find evidence on how you met your objectives. Quick, fill out the paperwork! How many valuable hours did that take you? Did you get them all finished on time? Of course you didn’t; no-one ever does.

And what about your objectives? Were the ones set 12 months ago still relevant 12 months later?

The organisation as a whole doesn’t act this way. Strategies are reviewed regularly and a good business will review, course correct and maybe even pivot when serious threats or opportunities arise. The businesses that set objectives for themselves and then follow them blindly for 12 months are the ones who find themselves in serious trouble or at the mercy of industry disruptors. Yet the annual appraisal persists.

What happened to People over Processes?
What happened to Real Value over Documentation?
What happened to Communication over Contract?
What happened to Responding to Change over Following a Plan?

And what about the morale of our Agile teams? We are reinforcing the idea of collaboration, teamwork and building great products together (whether that’s software or otherwise), but annual appraisal time arrives and suddenly their performance is measured against the very people they are collaborating with. As George Orwell might proclaim:

all developers are equal, but some developers are more equal than others

The annual appraisal is the waterfall methodology of the team management world. As leaders, we owe it to our teams to be more Agile.

A Different Way

Below is a framework on how I feel appraisals (for want of a better word) in Agile organisations should be conducted, which follows some aspects of the Scrum framework. As with all things Agile, this should not be taken as a set of rules that must be followed blindly: if, on reflection, something is not working for your team then discuss and adjust as necessary.

1. Regular conversation between a team member and their manager is critical. Formal documentation should not be required; trust, openness and honesty should form the cornerstone of the relationship. It is important that team managers are aware of the wider business priorities and objectives: they are to become the “product owners” of their team.

2. Priorities and objectives to be discussed on a regular cycle, suggest monthly, and adjusted as necessary in line with changing business priorities.

3. The objectives of the individual team members should closely align. They are a collaborative team and will achieve their objectives together. Specialised individual objectives are fine, but most will find even these objectives will require the input or guidance of colleagues. Consider sharing your objectives with your colleagues so that they may be able to help. Work together, succeed together.

4. Hold retrospective sessions quarterly to provide and receive feedback from individuals. What went well? What didn’t go so well? What can we do differently? This is a two-way thing: team managers should expect and welcome feedback and honesty from their team members too. If you can improve yourself whilst improving your team, you will become a better leader.

5. Team members to take responsibility, along with team managers, for these sessions happening. As self-organising teams, you are equally responsible for ensuring you are working on the correct thing and that you, as an individual, are delivering value to the business.

6. Abolishment of grading team members. The ongoing conversation and relationship between the team manager and her team should be more than sufficient for them to understand the performance of the individual team members and for them to understand themselves. Pay reviews should be built on the understanding the manager has of their team and the trust senior leaders place in the opinion of managers.

Change

This change can be radical for many businesses and most will be fearful and certainly ill-prepared to deal with it.

It is important that HR is key in equipping managers and leaders with the skills required to become excellent coaches, being able to give and receive constructive feedback.

This is also a huge cultural change for many organisations who will have used the annual appraisal as a crux for handling pay reviews and employee performance issues. There will be much resistance to this but if we want to build great products and great companies then we need great people to perform at their best, and that means that sometimes we have to tear down old ways of thinking when they aren’t relevant in the modern workplace.

Waterfall is not the way we build complex, changing products any longer. Annual appraisals should not be the way we manage and lead complex, changing organisations any longer.

As leaders, we owe it to the people who help us deliver value to our organisations every day the very best support and guidance we can.